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COPYRIGHT 2005 The Dallas Morning News
Byline: Will Deener
Feb. 27--One of Wall Street's most obscure financial instruments boasts a 20 percent annual growth in volume, an important Dallas connection and a name evoking Chicago's hurly-burly commodities markets.
This is the world of single-stock futures -- derivatives that let investors control huge blocks of such tony stocks as IBM Corp., Microsoft Corp. and Cisco Systems Inc. with relatively little cash.
A product of the trading pits famed for the hoarse-throated exchange of corn and pork bellies, single-stock futures have enjoyed quiet growth among institutional investors and other sophisticated traders since they debuted with great buzz three years ago.
Now they're starting to gain traction on Main Street, their backers
say.
"Small investors are getting into single-stock futures," said Martin Doyle, president of OneChicago LLC, the electronic exchange where these contracts trade. "We are seeing a steady and methodical gain in the number of contracts purchased by retail investors."
Volume increased from 1.6 million contracts in 2003 to 1.9 million in 2004, and Mr. Doyle predicts another 20 percent increase this year. (OneChicago doesn't track how many of those contracts were purchased by small investors.)
But alongside that growth come words of caution from independent experts, who question whether these complicated derivatives are even necessary and warn that they can be dangerous...
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